Accounting is an information system which is a systematic and comprehensive way of identifying financial data, recording into accounting book, summarizing and finally creates and supply financial statements to its users.
By following which rules-regulation and strategies a person or a organization does the following tasks such as identifying of financial events, recording in account book, classification and after financial period, makes account statement such as income statement, balance sheet etc and provides those information to its users can be define as Accounting.
American Certified Public Accounting Institute-defines accounting as...
"Accounting is the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are in part at least of a financial character and interpreting the results there of"
Characteristics of Accounting:
- It identifies financial events or data.
- It records those data in financial books which is called journal book.
- It summarizing financial data by transferring data from journal book to ledger book.
- It creates trial-balance before making income statement and balance sheet.
- It creates income statement which reflects the income and expenditure situations.
- It provides balance sheet by showing assets and liabilities after an accounting period.
At the concluded point, it can be said that By studying of which subject helps to identify and record financial data for an business and non business concerns or small business and large business concern, classify and show financial condition can be called accounting.
